Satyam’s Chairman B. Ramalinga Raju has resigned from the company. In a shocking revelation today, Raju has also admitted to committing frauds within the company.
Below find the highlights of Raju’s letter dated January 7 to the Board of Directors giving details of the balance sheet:
The balance sheet carries as of eptember 30, 2008
–Inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books).
–An acrued interest of Rs 376 crore which is non- existent
–An undersated liability of Rs 1,230 crore on account of funds arranged by me (Raju).
–An over stated debtors position of Rs 490 crore against Rs 2,651 reflected in the books
If that is the gist of it. There is more.
The company reported a revenue of Rs 2,700 crore as against an actual revenue of Rs 2,112 crore for the September quarter. It also reported an operating margin of Rs 649 crore as against the actual operating maergin of Rs 61 crore (3% of revenues).
This has resulted in artificial cash and bank balances going up by Rs 588 crore in Q2 alone, the letter said.
The letter further said that the gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years.
Raju wrote in the letter that a task force comprising members such as Subu D, TR Anand, Keshab Panda and Virendra Agarwal and AS Murthy, Hari T and Murli V has been formed in the last few days to address the situation arising out of the failed Maytas acquisition attempt.
Ram Mynampati would be made the Chairman of this task force to immediately address some of the operational matters on hand. Merrill Lynch would be entrusted with the task of exploring some merger opportunities.
In the letter, Raju has apologised to all Satyamites and stakeholders for the current situation.
Raju says that neither he nor the managing director sold any shares in the last eight years except a small proportion sold for philanthropic purposes.
Raju also acknowledged that neither he nor the managing director have benefited in financial terms on account of the inflated results. He confessed that none of the board members had any knowledge of the situation in which the company is placed.
Download Ramalinga Raju’s letter to the board .